Low deposit rate to boost sales

The West Australian government is endorsing a series of private initiatives to entice first-home buyers into the local market. The sweeteners include ultra-low deposit home loans in a move designed to shift pressure off its state-run mortgage book.

Housing Minister
Troy Buswell
publicly supported a new mortgage product launched by Commonwealth Bank-owned Bankwest yesterday that requires a deposit of just 3 per cent, which is less than the requirements set by the government-owned Keystart Home Loans.

“I think this product is another quantum leap in terms of attracting affordability," Mr Buswell said.

“What you have here is a low deposit response from the private sector which is more competitive than what we offer through Keystart."

WA’s residential housing market is among the weakest in the country after the expected recovery from the financial crisis failed to materialise.

Some of the state’s biggest property names publicly supported the Bankwest initiative, with property developer Nigel Satterley and home builder Dale Alcock attending the launch.

As part of a series of private initiatives to stimulate the local market, Mr Satterley said there were now 30 builders in the so-called “building blocks program" offering rebates and incentives to prospective buyers.

The initiatives were met with qualified support from parts of the sector concerned that low-deposit requirements and artificial stimulants have their drawbacks.

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Property valuer Gavin Hegney said the measures were being introduced at a time when rising rents were almost high enough to start tipping people back into home ownership. “Sometimes these sorts of things can be introduced at the wrong time," he said. “Then you have to allow rental prices to bloat again."

WA’s residential vacancy rate is expected to hit 3 per cent next year, which would probably stimulate a rent rise.

Bankwest has earmarked an initial $500 million for its new mortgage product.

Managing director
Jon Sutton
rejected suggestions the low deposit move was irresponsible. “It doesn’t do anybody any good to go out and lend vast sums of money to ­people who cannot afford to pay it back," he said.

The first-term Liberal state government has a policy of wanting to encourage high-density residential options close to public transport, after the last mining boom led to a doubling of land prices in the three years leading up to the financial crisis.